Michigan In The Middle For Medicare Drug Premium

July 21, 2008
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Twenty-five million elderly and disabled Americans were enrolled in the Medicare Prescription Drug Benefit program, also known as Medicare Part D, at the start of this year. More than 437,000 of them live in Michigan.

At the beginning of 2008, 55 Medicare prescription drug plans were offered in the state — tying Michigan for fifth nationwide in the total number of PDPs available in a state. West Virginia and Pennsylvania led all states with 63 plans, while 47 were offered in Alaska.

Michigan has 22 insurers offering Medicare prescription plans, placing the state in a seven-way tie with the fourth most number of companies marketing the product. Again, Pennsylvania and West Virginia tied for first with 26. Alaska had the fewest with 18.

The average monthly Medicare Part D premium at the start of the year in Michigan was $40.81, putting the state in 23rd place among the 50 states. Utah and Idaho had the highest monthly premium at $45.39 and New Mexico the lowest at $34.29. The national monthly average was $39.86.

Premiums, though, for some enrollees could change this fall if Congress approves President Bush’s proposal. Under current law everyone enrolled in a specific Part D plan pays the same rate. But President Bush wants the program’s premium to become income related, like the Medicare Part B Plan, and doing that would result in higher monthly rates for those with more income. The White House said the change would add $3.2 billion of revenue to the drug benefit.

The Department of Health and Human Services estimated that Medicare Part D spending will total $45 billion this year and $55 billion next year, when overall Medicare spending is expected to reach $420 billion and account for 14 percent of the $3 trillion federal budget. Only spending for defense and Social Security would be higher.

Cholesterol-lowering and cardiovascular medications are the drugs most prescribed to Part D enrollees, followed by drugs for osteoporosis, proton pump inhibitors for ulcers and gastrointestinal reflux, and a dementia medication.

Here are the top 10 brand name drugs, ranked in order by the number of prescriptions filled in 2007.

Brand Name

Type of Drug

Median Negotiated
Monthly Price








Proton pump inhibitor



Proton pump inhibitor


















Proton pump inhibitor


The Medicare Part D standard benefit has a deductible of $275 and a coinsurance of 25 percent to an initial limit of $2,510 in total drug costs. Then comes the coverage gap with enrollees paying 100 percent of their drug costs until their total spending has reached $4,050. After hitting that figure, enrollees pay 5 percent of their costs out-of-pocket.

But for 2008, just 12 percent of the prescription drug plans only offered the standard benefit. Nearly 60 percent of the PDPs don’t have a deductible and most charge tiered co-payments instead of the 25 percent coinsurance. Still, 70 percent of the plans don’t provide coverage in the gap period. Those that do only cover generic drugs.

The monthly Part D premium paid by enrollees covers roughly 25 percent of the cost for the standard drug benefit, while Medicare subsidizes the remaining 75 percent. The Medicare Modernization Act of 2003 prohibits the federal agency from directly negotiating drug prices with pharmaceutical companies.

Sources: Henry J. Kaiser Family Foundation & Pennsylvania Pharmaceutical Assistance Contract for the Elderly program, April 2008

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